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Political Memo; Perils Seen in Bradley's Tax Proposal

As a professional basketball star three decades ago, Bill Bradley was shocked at how much time he spent with lawyers seeking ways to shelter his income from taxes, and at how team owners benefited from ''loopholes big enough to drive a Sherman tank through,'' as he put it in his 1976 memoir, ''Life on the Run.''

His interest in a more equitable tax code carried over into his career in the Senate, and now into his campaign for the Democratic presidential nomination. On Tuesday, Mr. Bradley proposed steps that he said would increase tax collections by $125 billion over a decade by clamping down on corporate tax shelters and other dodges, ending tax breaks for some special interests and generally encouraging greater compliance with the tax code.

It is an idea with the potential to have tremendous popular appeal. It is grounded in general agreement that abusive tax shelters cost the government billions of dollars each year. It is in sync with a similar though less sweeping effort by the Clinton administration. And it could provide a new pool of money to help pay for Mr. Bradley's plans to increase access to health care and reduce child poverty.

But in making the proposal, Mr. Bradley waded into a political swamp, where what appears from one perspective to be a rip-off appears from another to be sound tax policy, where the line between collecting revenue and raising taxes is fuzzy and where no politician, including Mr. Bradley, can claim to be pure.

The Treasury Department has grown more aggressive in the past few years in cracking down on ever-more complex tax avoidance strategies developed by accounting firms and lawyers on behalf of corporate clients. And there have been periodic efforts over the years to cleanse the tax code of breaks inserted to benefit particular industries, companies and even individuals.

One of the most ambitious was the 1986 tax bill, which had its genesis in legislation proposed by Mr. Bradley several years earlier. But members of Congress have always found it much easier to give lobbyists and constituents a new break than to take one away.

As a result, the tax code has been gradually loaded up again with arcane provisions -- at least one of which, a tax break for pharmaceutical companies operating in Puerto Rico, was supported in 1992 by Mr. Bradley. Mr. Bradley also made a point on Tuesday of restating his support for a tax break for the production of ethanol, a corn-based fuel. Pledging to retain the ethanol subsidy is almost a right of passage for candidates in Iowa, whose caucus on Jan. 24 will be the first real test of the campaign.

''Some of the most effective lobbyists in Washington, who have oiled the machine of Congress well with campaign contributions, benefit greatly from keeping the system the way it is,'' Mr. Doggett said.

''The dissatisfaction that people have expressed about the Internal Revenue Service relates as much to the feeling that some people are not paying their fair share, that they are cheating and gaming the system, as it does to the particular level of taxes that any taxpayer pays,'' he said.

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But the problem goes beyond the clout of lobbyists. There are legitimate questions about how to define what constitutes a shelter versus what might be an arcane but wholly legitimate business transaction. The Treasury Department spent much of last year wrestling with that distinction as it tried to develop legislation on tax shelters that would even get a hearing from the Republican-controlled Congress, where measures that could be interpreted as tax increases tend to languish.

''The question is, How do you define what's an abuse and how do you keep legitimate transactions from getting swept up?'' said Mark A. Weinberger, a principal with the lobbying firm Washington Counsel, which is representing business groups opposed to broadly written legislation on tax shelters.

''Bradley has avoided that difficult issue of defining what's a tax abuse or loophole,'' Mr. Weinberger said, ''and just articulated the popular rhetoric of saying he doesn't like tax abuses and special interests.''

With Mr. Bradley under attack from Vice President Al Gore for proposing domestic policy initiatives that could cost more than the government can afford, Mr. Weinberger said, the Bradley plan seemed more an effort to raise revenue than to address in a serious way the complicated problems of the tax code.

''I've got to believe he's doing it to blunt the criticism by the vice president,'' Mr. Weinberger said.

Some tax analysts said they were skeptical that Mr. Bradley's plan would generate anywhere near the promised $125 billion even if it was enacted. But the Bradley campaign said that the plan was realistic, and that if Mr. Bradley became president he would break the current gridlock over how to handle the issue.

''If Bill Bradley is president, everyone in Washington will know this is a guy who is committed to tax fairness and the principle of tax reform,'' said Eric Hauser, Mr. Bradley's spokesman.

Mr. Bradley, Mr. Hauser said, would draw a line between those provisions with ''broad social and public value'' and those ''clearly driven by private interests that are market distorting.''